Question 1

Which of the following best describes a primary difference between managerial accounting and financial accounting?

Accepted Answer

Managerial accounting focuses on providing information to internal users, while financial accounting focuses on external users.

Question 2

A company that provides consulting services to clients but does not sell physical goods is best classified as which type of business organization?

Accepted Answer

Service company

Question 3

Which of the following is NOT one of the three components of the triple bottom line in sustainability accounting?

Accepted Answer

Product

Question 4

A company is considering using a machine for a new project. If the company uses the machine for this project, it will forgo the opportunity to rent it out for $$5,000 per month. What is the 5$$,000 called?

Accepted Answer

Opportunity cost

Question 5

Which of the following costs would be classified as a period cost for a manufacturing company?

Accepted Answer

Sales manager's salary

Question 6

A company estimates its total manufacturing overhead for the year to be $120,000 and its total direct labor hours to be 30,000. What is the predetermined overhead rate?

Accepted Answer

$$4.00 per direct labor hour

$$ 
\frac{120,000}{30,000} = 4.00 $

Question 7

In a job-order costing system, which document is used to record the quantity and cost of materials requested for a specific job?

Accepted Answer

Materials requisition form

Question 8

A company applied $$18,000 of overhead to jobs during the year. Actual overhead incurred was 16$$,000. What is the result and its effect on Cost of Goods Sold?

Accepted Answer

Overapplied by $$2,000; Cost of Goods Sold will decrease by 2$$,000.

Question 9

Which of the following best describes the flow of costs in a job-order costing system?

Accepted Answer

Raw Materials → Work in Process → Finished Goods → Cost of Goods Sold

Question 10

A company has the following data for a job: Direct Materials = $$2,000, Direct Labor = 1$$,500, Applied Manufacturing Overhead = $1,200. What is the total manufacturing cost for the job?

Accepted Answer

$$4,700

2$$,000 + 1,500 + 1,200 = 4,700 $

Question 11

Which of the following statements about process costing is TRUE?

Accepted Answer

Process costing is used when products are homogenous and produced in a continuous process.

Question 12

A company has 1,000 units in beginning inventory, starts 4,000 units during the period, and has 1,500 units in ending inventory. How many units were completed and transferred out?

Accepted Answer

3,500 units

$$ 
1,000 + 4,000 - 1,500 = 3,500 $$

Question 13

In process costing, which of the following is TRUE regarding equivalent units using the weighted average method?

Accepted Answer

Physical units must be greater than or equal to equivalent units.

Question 14

A company has the following costs for a process: Direct Materials = $$10,000; Conversion Costs = 15$$,000. There are 2,000 equivalent units for direct materials and 1,500 equivalent units for conversion costs. What is the cost per equivalent unit for conversion costs?

Accepted Answer

$$10.00

$$ 
\frac{15,000}{1,500} = 10.00 $

Question 15

Which of the following is an example of a direct cost for a specific job in a furniture manufacturing company?

Accepted Answer

Wood used to build a custom table

Question 16

Which of the following best describes the Sarbanes-Oxley Act's impact on managerial accounting?

Accepted Answer

It increased the emphasis on internal controls and ethical standards in financial reporting.

Question 17

A service firm assigns indirect costs to clients based on which of the following?

Accepted Answer

Billable hours

Question 18

Which of the following is the correct formula for calculating Cost of Goods Manufactured?

Accepted Answer

$$ 	ext{Direct Materials Used} + 	ext{Direct Labor} + 	ext{Applied Manufacturing Overhead} $$

Question 19

Which of the following is a characteristic of variable costs?

Accepted Answer

They change in total in direct proportion to changes in activity level.

Managerial Accounting Exam Review: Chapters 1-3 Study Guide

Study Guide - Practice Questions

Study Guide - Flashcards